HOW GOOD ARE THE CONGRESSIONAL BUDGET OFFICE (CBO) PREDICTIONS?

CBO 2010 DATA

ACTUAL DATA AVAILABLE AS OF 2017

CBO PREDICTION MOVING FORWARD

SUMMARY

In their 2010 estimates of the impact of the Affordable Care Act (ACA), the CBO was right on in predicting that a big drop in the percentage of people under age 65 who would lack insurance, and that turned out to be the case. CBO projected that in 2016 that nonelderly rate would fall to 11 percent, and the latest figure put the actual rate at 10.3 percent.

The CBO estimate was 24 million would lose their insurance based on the American Health Care Act (AHCA) passed by the House. Under the current Senate proposal or “Better Care Reconciliation Act” (final form to be determined at the time of this writing), that number was downgraded a bit to 22 million total. That loss was predicted to occur over three “market” segments.

The Medicaid expansion program had been tremendously popular, adding millions to the Medicaid rolls. The CBO estimated up to 14 million would lose coverage (actual numbers vary somewhat depending upon the AHCA or BCRA is used as the model), putting strains on emergency departments and federally funded community health centers, which could also lose their ACA funding.

As of March 2016, the Centers for Medicare and Medicaid Services (CMS) reported that nearly 72.5 million individuals were enrolled in Medicaid/CHIP. Since the beginning of the ACA’s first Open Enrollment Period in October 2013, Medicaid/CHIP enrollment has grown by 15.0 million individuals.

CBO greatly overestimated the number who would get government-subsidized coverage through the new insurance exchanges. In 2010 The CBO estimated that approximately 24 million people would purchase their own coverage through the new insurance exchanges. Nearly 83%, or 10.5 million of the 12.7 million exchange members, received the law’s premium subsidies, according to HHS.

The CBO made no prediction as to how many exchange patients would lose insurance due to diminution of subsidies. At the end of the day the BCRA will increase the ranks of the UNINSURED and UNDERINSURED.

On balance, the CBO predicted in 2010 that the number of people obtaining coveragethrough their employerwould be about 3 million lower in 2019 under the legislation. The net change in employment-based coverage under the proposal would be the result of several flows, which can be illustrated using the estimates for 2019. Data indicates an actual drop in the percentage of non-elderly employees offered employer sponsored health insurance for all employees (71% to 66%), full time employees (76% to 72%), and part time employees (26% to 21%).

The ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other affected parties would respond to the changes made by the legislation are all difficult to predict, so the estimates discussed in this document are uncertain. In particular, states would have a wide range of options—notably, the optional waivers discussed above that would allow them to modify the minimum set of benefits that must be provided by insurance sold in the nongroup and small-group markets and that would permit medical underwriting for people who did not demonstrate continuous coverage. The array of market regulations that states could implement makes estimating the outcomes especially uncertain. But, throughout, CBO and JCT have endeavored to develop estimates that are in the middle of the distribution of potential outcomes.[1]

UNINSURED

The CBO on March 20, 2010 predicted a big drop in the percentage of people under age 65 who would lack insurance, and that turned out to be the case.[2]CBO projected that in 2016 that nonelderly rate would fall to 11 percent, and the latest figure put the actual rate at 10.3 percent.[3]Before the Affordable Care Act, most of the uninsured were low-income and either couldn’t afford coverage or didn’t have access to it. The health reform law provided generous subsidies for these folks to buy policies on the individual exchanges or enabled them to sign up for Medicaid in the 31 states that agreed to expand. Also, it allowed many young adults to stay on their parents’ plans until age 26.[4]

What has been predicted for the various ideations of repeal and/or repeal and replace the Affordable Care Act (ACA)?

The CBO estimate was 24 million for the American Health Care Act (AHCA) passed by the House. Under the current Senate proposal or “Better Care Reconciliation Act” (final form to be determined at the time of this writing), that number was downgraded a bit to 22 million total. That loss was predicted to occur over three “market” segments:

MEDICAID

States received generous subsidies for expanding Medicaid eligibility to people with incomes up to 133% of the federal poverty level, and this provision opened the program to childless adults, who had previously been excluded in many states. In June 2012, the US Supreme Court made the expansion voluntary, and as of January, 2016, 18 states were not participating.[5]

If it’s removed: The Medicaid expansion program had been tremendously popular, adding millions to the Medicaid rolls. The CBO estimated up to 14 million would lose coverage (actual numbers vary somewhat depending upon the AHCA or BCRA is used as the model), putting strains on emergency departments and federally funded community health centers, which could also lose their ACA funding.

“As of March 2016, the Centers for Medicare and Medicaid Services (CMS) reported that nearly 72.5 million individuals were enrolled in Medicaid/CHIP. Since the beginning of the ACA’s first Open Enrollment Period in October 2013, Medicaid/CHIP enrollment has grown by 15.0 million individuals, or 26.5 percent. Enrollment growth in Medicaid expansion states has been significantly larger than in non-expansion states. On average, Medicaid expansion states have experienced a 35.5 percent growth in enrollment, compared to a 10.4 percent growth in non-expansion states. [6]

INDIVIDUAL MARKETPLACE

“CBO greatly overestimated the number who would get government-subsidized coverage through the new insurance exchanges. In 2010 The CBO estimated that approximately 24 million people would purchase their own coverage through the new insurance exchanges.

“Under the legislation, certain employers could allow all of their workers to choose among the plans available in the exchanges, but those enrollees would not be eligible to receive subsidies via the exchanges. Approximately 5 million people would obtain coverage in that way in 2019, bringing the total number of people enrolled in exchange plans to about 29 million in that year.”[7]

“As of Dec. 31, 2015 the ACA’s marketplaces had 8.8 million paying members. The Obama administration expected that of the eventually 12.7 million current exchange enrollees, there will be 10 million consumers routinely paying their monthly premiums by the end of this year. “Indeed, the 12.7 million people with exchange coverage will winnow down throughout the year as people drop coverage or gain insurance through other means, such as a job or Medicaid. But a drop likely won’t be too steep since the CMS has already factored in many plan cancellations.” [8]

“HHS parsed out different data points in its latest release, showing that, for example, 39% of the 12.7 million ACA enrollees were new to the marketplaces. Most enrollees have low or moderate incomes, a recurring theme in the third year of the ACA’s exchanges. Nearly 83%, or 10.5 million of the 12.7 million exchange members, received the law’s premium subsidies, according to HHS.” [9]

Under the AHCA and the “Better Care Reconciliation Act”

BCRA counts affordable as 16.2% of an individual’s income. The Senate bill would raise the amount individuals are expected to pay into their health plans for people who are low or middle income. A 60 year-old who earns $35,649 (300% of poverty line) would be expected to spend 16.2% of their income ($5,773) before they get any help from the government. Under the ACA it was $3,442. The Senate bill on average covers 58% of an enrollees’ cost. Most likely there will be higher copays and deductibles.[10]

The CBO made no prediction as to how many exchange patients would lose insurance due to diminution of subsidies. At the end of the day the BCRA will increase the ranks of the UNISURED and UNDERINSUED. UNDERINSURED Defined:[11]

out-of-pocket costs, excluding premiums, over the prior 12 months are equal to 10 percent or more of household income; or

out-of-pocket costs, excluding premiums, are equal to 5 percent or more of household income if income is under 200 percent of the federal poverty level ($22,980 for an individual and $47,100 for a family of four); or

deductible is 5 percent or more of household income

What Does That Mean?

23 percent of 19-to-64-year-old adults

31 million people in 2014

Half (51%) of underinsured adults reported problems with medical bills or debt of $4,000 or more

More than two of five (44%) reported not getting needed care because of cost. In essence, the ranks of the UNDERINSURED will increase from the present 31 million, and many more people will not be able to afford health care at all.[12][13]

EMPLOYER PROVIDED HEALTH CARE

“On balance, the number of people obtaining coverage through their employer would be about 3 million lower in 2019 under the legislation, CBO and JCT estimated (2010). The net change in employment-based coverage under the proposal would be the result of several flows, which can be illustrated using the estimates for 2019:[14]

For the AHCA, another 7 million people who currently have insurance through their employer would drop that coverage if the individual mandate – which currently requires that most people have coverage or pay a penalty at tax time – goes away, as it would under the AHCA.[16]About 7.5 million people had to pay a fine through their taxes for not buying insurance in 2014. Cost $200/person. In 2016: Between 6.5 and 8 million in 2015. Cost $375/person.[17]

Given the confounding variables which the CBO has to work with, it looks like their track record is pretty good and based on solid grounds. We would be wise to heed CBO predictions when discussing the ‘down-stream’ impact of health care legislation.